City of Paris Climate Bond Investor presentation November 2015 1
Contents : 1. A leading European capital 2. Organization and responsibilities 3. Financial balances 4. Debt Management 5. Paris Climate Action Plan 6. An inaugural Climate Bond for Paris Paris city hall 2
A leading European capital 3
A leading European city Paris has developed, through the ages, into a center of art, medicine, science, fashion, tourism, culture and finance, becoming one of the world's most influential global cities and the most visited city in the world (29 Million visitors in 2014*) * Source : Paris-Ile de France Tourist Board (CRT), 2015 Paris is at the heart of the Ile-de-France Region, one of the wealthiest regions in Europe and main economic hubs Paris ranks among the top cities in the world in terms of livability and hosts one of the planet s most vibrant cultural and artistic scenes As the capital, Paris is the political, administrative and business center Seine banks transformed in pedestrian area 4
A dynamic city with economic strengths The gross domestic product (GDP) of Paris represents 10% of France s GDP. Its GDP per capita is equivalent to 3 times the EU-28 average* * See methodology by eurostat It is essentially a service economy, with business and financial services (around 85 % of the GDP) Business facilitated by top notch infrastructures and heart of Europe location A hub of Europe s economy. Paris region offers some of the most favorable economic conditions for setting up a business : 2 major airports, 5 container terminals along 310 miles of navigable waterways, 6 railway interchanges, 14 metro lines, 5 RER (regional express trains) lines, 7 tram lines, more than 300 bus lines, First European city for hosting of headquarters of top 500 global companies High foreign investments (13% of total foreign investment in France for Paris 2013) The unemployment rate is structurally lower than the national level (see the attached graph) 10 9 8 7 6 Harbour at Tolbiac, 13 rd arrondissement Unemployment rate (%) 9.9 8.8 8.3 Paris Ile-de-France Region France Source : Insee, 2014 5
A dynamic population With 12 million inhabitants, the region Ile-de-France where Paris is located represents almost 19 % of France s total population (central Paris : 2.3 million) Since 1999, the population of central Paris has increased by over 100,000 people This population is on average younger than the rest of the national territory The Paris region has over 600,000 students, including 335,000 within the city limits 372 educational institutions (7 Universities, 2 IUT, 13 engineering schools, 37 business schools, ) A highly qualified workforce 43.1 % of the working population are French executives in Paris 6.5 % of Europe's researchers (over 130,000 people) are located in the Paris region A relatively strong share of new technology companies in Paris economy Source : Insee, 2013 Pyramid age structure Paris France Under 18 17,1% 22,2% 18 to 64 68,3% 60,7% Above 64 14,6% 17,1% Ile-de-France ESPCI Higher School of Industrial Physics and Chemistry of the City of Paris Source : Insee, Distribution of the graduates of Higher education according to the region of residence 2012 6
Organization & Responsibilities 7
Paris fields of responsibilities Paris is committed to the well being of its population, sustainable development, and supporting the French economy. By law, the fields of responsibilities cover : Social services & Healthcare Urban planning Primary and Secondary Schools Culture Environment Economic development Water Management, Waste collection and recycling Elementary school Wattignies Renovation of Les Halles district Philharmonie concert hall 8
Paris institutions Party The Majority (90 seats) Socialist Group and related 56 Communist Group Front de Gauche 13 Green Group of Paris 16 Center-leftist Group and independents 5 The Opposition (73 seats) Elected Representatives Les Républicains 54 UDI MoDem 16 Paris specific status : a City and a Department, run by the same Council made up of 163 representatives who are elected every 6 years (last election : 2014) The Mayor and Deputy Mayors are elected by the Council of Paris The French law on territorial reform (n 2015-991, 07 th august 2015) seeks to simplify local administration in order to make it more efficient Non-Attached Members President of the Council of Paris Ms. Anne HIDALGO 3 The city will become the largest member of the Metropole de Paris which will become a legally-recognized administrative body in 2016. Council of Paris 9
2016 : Métropole du Grand Paris Map : distribution of inhabitants in the future metropolis (2016) 10
2016 : Métropole du Grand Paris Métropole du Grand Paris : an intermunicipal body which will be in charge of coordinating housing policy and urban planning over 131 municipalities (7 Million inhabitants) of the greater Paris area A gradual transfer of devolved responsibilities : 2016-2017 : setting up of the Metropolitan Project and setting up of Master Development Plans (urban planning, energy distribution networks, pollution control, risk management, ) 2018 : transfer of responsibilities A council of 209 elected members from the member s cities (62 from Paris City) Budget : EUR 3.8 bn Income = Cities taxes transferred + State grants Expenses = Devolved responsibilities + Compensation towards Cities NO BUDGETARY IMPACT FOR PARIS 11
Paris relationship with the State French local and regional governments financial and administrative autonomy are constitutional principles. No explicit guarantee on local authorities debt from the State but close relationships : The State guarantees the notion of general public interest : 3 types of central control : controlling the legality of the city s initiatives by the representative of the State for Paris Region controlling public accountancy tasks and local authority budget by the Finance Ministry checking by a public financial Court The State guarantees financial backing : by determining tax bases (local authorities are free to determine most of the tax rates) by guaranteeing that local authorities receive tax revenues due by giving local authorities monthly advances of local tax revenue by compensating for devolved responsibilities 12
Financial balances 13
Local Authorities in France 20.9% of public spending or EUR 252 bn 10.6% of the public deficit or EUR 9.2 bn out of EUR 87.1 bn 58.8% of public investment or EUR 50.4 bn 9.4% of public debt or EUR 182 bn Source : 2013 figures 14
Paris Budget structure A total budget * of EUR 9.4bn Cautious budget planning as a matter of principle : - Execution rate (realized vs forecasted)**: Operating surplus = 131% External funding = 61% A structural and significant operating surplus ** : EUR 677M Investment budget of EUR 1.5bn Operating budget growth rate (2008 = 100) 125 120 115 110 105 100 2008 2009 2010 2011 2012 2013 2014 Operating income Operating expenditures Golden rules imposed by the law : - operating income funds operating expenditures - debt amortization is paid by own resources debt funds investment * Consolidated budget 2015 (City +Department) ** On average over the last 6 years 15
A diversified operating income Operating income = EUR 8 bn 2011 2012 2013 2014 2015 Taxes 62% 65% 65% 63% 68% State grants 17% 17% 16% 15% 12% Compensation for new responsibilities 4% 4% 4% 4% 4% Subsidies and contributions 3% 3% 3% 3% 3% Fees concessions and services provided 6% 6% 6% 5% 6% Others 7% 5% 5% 8% 6% Financial income 0,3% 0,3% 0,2% 0,4% 0,3% Exceptional income 0,1% 0,1% 0,4% 0,5% 0,2% Operational income 100% 100% 100% 100% 100% Sources : Consolidated budget 2015 Administrative accounts 2011-2014 16
A diversified operating income A strong base for incomes : Low tax rates compared to the national average Dynamic tax income due to the population profile and solid economic activity base High potential for future income from concessions Dynamic tax income Property taxes Residence taxes Business property contribution An ability to reform to face decreasing State grants Stability of other resources 250% 200% 150% 100% 50% 0% Concession fees : increase on new tenders 2011 2012 2013 2014 2015 17
Low tax rates Tax level comparison : 55% 53% 50% 45% 43% 40% 35% 33% 36% 30% 25% 21% 28% 24% 21% 23% 22% TH Residence Tax TF Property Tax 20% 15% 13% 14% 10% Paris Lyon Strasbourg Nice Bordeaux Montpellier 18
Operating expenditures Operating expenditures = EUR 7,7 bn 2011 2012 2013 2014 2015 Personnel costs 30% 30% 29% 29% 29% General expenditures 12% 12% 11% 11% 10% Social aid 21% 22% 21% 21% 21% Subsidies 6% 6% 7% 7% 7% Contributions towards public authorities 11% 11% 11% 11% 10% Contributions towards local authorities 15% 16% 16% 17% 17% Others 2% 2% 2% 2% 2% Financial charges 1,3% 1,4% 1,5% 1,7% 1,9% Exceptional charges 1% 1% 1% 1% 1% Operational expenditures 100% 100% 100% 100% 100% Source: Consolidated budget 2015 Administrative accounts 2011-2014 19
Controlled operating expenditures Operating expenditures strictly controlled Human resources costs and general charges under tight control helped by administrative reform General expenditures (EURM) Social aid stable despite adverse economic situation and high level of non-compulsory expenditures 858 833 Contributions towards public authorities expected to decrease 823 822 804 Transfers towards other local authorities increased substantially in the last years 2011 2012 2013 2014 2015 Source : 2015= forecasts 20
An ability to reform 2015 Savings on general expenditures Decrease in communication expenditures, IT expenditures, road maintenance EUR -34M Non-compulsory subsidies EUR -17M Human resources costs Structural reforms EUR -24M 21
EUR M Investment budget A high level of self financing enabling a high level of Investment : Investment* = EUR 1.57 bn self financing* = 84% 2 000 Yearly Investment 1 600 1 200 Social housing street bleue 800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * On average over the last 6 years ** Consolidated budget 2015 (City + Department) Administrative accounts 2006-2014 22 22
Investment budget 2014 2020 10 EUR bn for the future of Paris Housing and social diversity 30% Environmentally-friendly city 9% Smart city and attractiveness 8% Municipal solidarity and families 12% Public Culture and transport heritage and soft 5% mobility 11% Participatory budgeting 5% Urbanism end redevlopment of public space Sports 16% 4% 23 23
Debt comparison Debt per capita (EUR) 3 646 3 641 2 294 1 611 Paris Marseille Lyon Lille - Paris : City+Department (jan 2014) - Marseille : City+Department+Urban community (jan 2013) - Lyon : City+Department+Urban community (jan 2013) - Lille : City+Department+Urban community (jan 2013) 24
Debt Management 25
Debt management To minimize present and future financial burdens To maintain the City s ability to raise funds whenever necessary A pragmatic and skilled management : Sophisticated debt management In house pricing tools Stress-tests are run periodically, A conservative debt management : Use of vanilla products (1) A limited interest risk exposure : no structured products (2) No currency risk (3) (1)+(2)+(3) 100% of the debt ranked «A1» (lowest risk) according to Gissler risk score card Management of counterparty risk An ability to raise funds via various channels A smooth debt amortization profile 26
EURM EURM Debt and Cash Management A linear debt amortization profile... 4 500 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034-500 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Outstanding amount as of 01/01 3 905 3 706 3 506 3 312 3 126 2 921 2 711 2 461 2 221 1 936 1 646 1 356 1 070 795 495 230 230 135 70 50 Annual repayments 200 200 194 186 205 210 250 240 285 290 290 286 275 300 265 0 95 65 20 50 7 000 6 900 800 6 700 600 6 500 400 6 300 200 6 100 000 5 900 800 5 700 600 5 500 400 5 300 200 5 100 000 4 900 800 4 700 600 4 500 400 4 300 200 4 100 000 3 900 800 3 700 600 3 500 400 3 300 200 3 100 000 2 900 800 2 700 600 2 500 400 2 300 200 2 100 000 1 900 800 1 700 600 1 500 400 1 300 200 1 100 000 900 800 700 600 500 400 300 200 100 0 facilitating the mandatory debt service obligation (art. L2321-2 from Local Authorities Code) Schuldschein-NSV Bonds Loans Schuldschein-NSV Bonds Loans 27
Debt and Cash Management Pragmatic Management Systematic evaluation of the different funding opportunities: Credit Loans vs Bonds, Private Placements vs public bonds, in Euros or other currencies, which enables low global funding costs 28
Debt and Cash Management City of Paris funding rate 5.0 4.5 4.0 3.5 3.0 % 2.5 Paris 15 years 2.0 1.5 Spread vs OAT 1.0 0.5 0.0 60 40 20 bp 0-20 -40 EIB funding 29
Debt and Cash Management Funding 2015* Outstanding debt : a funding rate of 2.78% an average maturity of 8.9 years Average funding last years (*) as of now 30
Debt and Cash Management Cash management and short term funding capacity : Commercial paper program Banks credit lines EIB credit line CDC credit line EUR 800M EUR 400M EUR 128M EUR 63M EUR 1.4bn Cash Position for 2015 31
Financial rating High rating for a local authority in France (AA / Negative / F1+) «revenue flexibility» «moderate indebtedness» «strong liquidity and prudent debt management» «highly efficient management» «diversified economy» (AA / Negative / A-1+) «very strong economy in an international context» «strong financial management» «high financial transparency, and detailed financial planning» «exceptional liquidity position» «prudent and sophisticated debt and liquidity management» «low contingent liabilities» «sizable disposable assets» 32
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Paris Climate Action Plan : Commitments June 2005: the City of Paris decides to draft its first community Climate Action Plan. October 2007 + December 2012: the Council of Paris unanimously approved the Paris Climate Action Plan, aiming to decrease the overall emissions in Paris by 75% in 2050 (compared to 2004), which exceeds European objectives. To reach this long-term purpose, short-term objectives are : -25% Greenhouse Gas (GHG) emissions by 2020 compared to 2004-25% energy consumption by 2020 compared to 2004 25% of renewable energies in the supply mix by 2020 Adapt Paris to climate change and resources scarcity 7.9 million tons CO 2 e A revision is planned in 2016 by the Mayor to define the Action Plan between 2020 and 2030 in order to reach -40% of the overall emissions in 2030. Source : Paris GHG inventory (2009) - ISO scope 1+2 and waste 34
Paris Climate Action Plan : a comprehensive strategy URBAN PLANNING FOR ENERGY EFFICIENCY 10% of Paris on high energy performances LOW ENERGY AND AFFORDABLE HOUSING 25,000 social housing units retrofitted THE TERTIARY SECTOR IN PARIS, A NEW CHALLENGE Partnership contract with 31 major enterprises : 600,000 tco 2 e avoided/y TOWARDS AIR QUALITY AND CLIMATE-FRIENDLY MOBILITIES NO diesel inside Paris by 2020 TOWARDS SUSTAINABLE CONSUMPTION, LESS WASTE-GENERATING Decrease food waste and open 1st methanisation center AN ADAPTATION STRATEGY Greening Paris for reducing impact of Urban Heat Island 35
Paris Climate Actions Plan : GHG EMISSIONS REDUCTION 2007-2014: what have we done? 2015-2020: what we will do Tramway and metro lines extensions: T3......................... +300 km of cycle lanes......................... 5 logistic spaces opened......................... Alternative transportation: Vélib (self-service bikes) Autolib (self-service electric cars) Traverses (small electric district buses) +4km of circular Tramway by2017 New electric High Quality Transit Lines +200 km of cycle paths 26,000 m² inter-modal logistics space +300 charging points for electric vehicles Incentives for electric vehicles -12 %* of persons transportation GHG emissions Few figures about Paris, at the moment : 6,000 streets = 1,700 km 2.7 million car commutes/day 360 metro stations, 60 bus lines 3 billion trips a year * From 2004 to 2012 36
Paris Climate Actions Plan : REDUCING ENERGY CONSUMPTION 2007-2014: what have we done? 2015-2020: what we will do Street lighting : Energy Performance Market -30 % of energy consumption by 2020......................... 100 schools heavily refurbished (-32 %)......................... +15,000 new social housing units with climate action plan performance standards......................... 30,000 social housing units retrofitted Gain : 297 GWh/y 4,000 jobs created Relamping of tunnels road and squares 200 new schools to retrofit 25,000 social housing units to retrofit High Performance program to retrofit swimming-pools -9 %* of energy consumption Few figures about Paris, at the moment : 220,000 social housing * Since 2014 37
Paris Climate Actions Plan : RENEWABLE SOURCES 2007-2014: what have we done? 2015-2020: what we will do +30,000 m² of solar cells......................... Creation of solar potential map......................... +12,000 dwellings supplied with renewable heat (at Paris Nord-Est)......................... 1 st experimentations of heat recovery on sewage water or showers water +7,000 m² of solar cells in urban renewal areas 7 buildings half heated by waste sewage energy recovery 2 new geothermal wells 2 swimming-pools heated by data-centers Few figures about Paris, at the moment : Solar cells : 50,000 m² Local RES production : 5 % Paris solar map PV cells on gymnasium 18 th 38
Paris Climate Actions Plan : ADAPT PARIS 2007-2014: what have we done? 2015-2020: what we will do +60 ha of new publics parks......................... Program to reduce water consumption......................... Vulnerability survey......................... 1 st adaptation roadmap adopted on September 2015 +30 ha of new publics parks +100 ha of green roofs +20,000 trees No Parisian far away 7 of fresh places Natural urban heat Island in Paris Few figures about Paris, at the moment : Land area : 105 km² (40.5 sq. miles) Woods and gardens : 2,600 ha 39
Paris Climate Action Plan : reporting Bleu Climat : annual report adopted by City Council on December with preliminary budget. Published on Paris website on January Perfomance contract : document published with Paris budget with some indicators of Paris Climate Actions plan CO 2 assessment of Administration : Every year for 80 % of the balance (excluded freight and civil servant transportation assessed every 3 years) Every year for main projects : social housing and public buildings retrofitting, car fleets management, street lighting performance CO 2 assessment of Community : Every year for global trends on people transportation and building Every 5 years in detailed for each posts (2004, 2009, 2014) International reporting : Carbon Disclosure Project (every year) Carbon Registry (every year) Covenant of Mayors (every two years) Nazca : United Nation Framework Convention on Climate Change platform 40
An inaugural Climate Bond for Paris A strong commitment to address climate change 41
Paris Climate Bond Size = EUR 300M Compliant with the four components of the Green Bonds Principles Use of Proceeds = funding of projects which contribute to fight against climate change Reporting towards investors on a yearly basis Independent second opinion Martin Luther King s park 42
Paris Climate Bond : Eligible Projects Eligible projects have been selected to cover each of the 4 categories of Paris Climate Actions Plan Categories Reduction of GHG emissions due to low-carbon transport Energy efficiency & savings Production of Renewable energy Adaptation to climate change Sub Categories Public transport : High Quality Transit Line, Tramway Line extension Alternative transport : Cycling Plan Electric vehicles : - Supporting the development of electric cars for residents and professionals, - Network of charging stations for electric and GNV vehicles Buildings : Construction of energy efficient, thermal insulation for buildings (schools, social housing, nursing homes, etc.) Public lighting and signals : Replacement of energy consuming appliances Renovation of heating systems Renewable energy power plants (solar panels) Geothermal energy Energy recovery (from wastewater networks, data centers, etc.) Municipal Heating network New green areas : Areas opened to the public, green roofs, facades and walls Tree planting programmes 43
GHG EMISSIONS REDUCTION initiatives (illustration) What you will fund : +300 charging points for electric vehicles (not only Autolib ) 2014 status : 507 points Deployment : 2015-2018 Location : streets and underground car parks Investment : 6 M CO 2 gain : 2-5 tco 2 /point/y Charging point and Autolib 44
REDUCING ENERGY CONSUMPTION initiatives (illustration) What you will fund : retrofitting of 200 schools 2014 status : 100 schools retrofitted Deployment : 2016-2020 Energy gain : -30 % (20 GWh/y) Investment : 74 M Other benefits : green roofs or renewable sources use Parisian school 45
RENEWABLE SOURCES initiatives (illustration) What you will fund : Swimming-pools heated by data-center and heat recovery 2014 status : 0 Data center Deployment : 2016-2018 Energy gain : -50 % Investment : 0.1 M Other benefits : experimentation before High Performance program Butte au Cailles swimming-pool (13th arrondissement) 46
Paris Climate Bond : Reporting Indicators Indicators on ESG Performance of the projects: 47
Paris Climate Bond : Reporting Indicators Indicators on Climate Benefits : * Detailed methodologies and assumptions have been established by internal expertise from Agence d Ecologie Urbaine of Paris accredited for Carbon Evaluation 48
Rating and awards City of Paris is leader of the sector (1 st among local authorities rated by Vigeo) : Global score = 64/100 (vs 43/100 on average for the sector) Sustainability Performance : Stable since last review Overall Advanced* performance, above average scores in all domains, The reporting commitments cover the selection of eligible projects, the estimation of climate benefits and the responsible management of projects, showing a consistent level of transparency and a capacity to assess and report on all ESG issues The bond (300 M ) to be issued by City of Paris is a Climate Bond, aligned with the Green Bond Principles and our level of assurance on sustainability of the bond is reasonable (reasonable = highest level of assurance) Paris graduated as Positive energy territory by the French Ministry for Ecology, Sustainable Development and Energy Legend : ++ means leading score + means score higher than the average * Vigeo scale of assessment : advance, robust, limited, weak 49
Contacts and Documentation Internet site : http://www.paris.fr/ - Climate policy documents : http://www.paris.fr/municipalite/action-municipale/paris-pour-le-climat-2148 - Budget documents : http://www.paris.fr/municipalite/l-hotel-de-ville/budget-de-la-ville-de-paris-2529 - Debt documents : http://www.paris.fr/municipalite/l-hotel-de-ville/taxes-et-impots-2318#programme-d-emissions-de-titres-emtn_10 - Vigeo documents : http://www.vigeo.com/csr-rating-agency/en/3-1-investisseurs-et-gestionnaires-d-actifs Contacts : Dominique FRENTZ +33 1 42 76 34 57 dominique.frentz@paris.fr Chief Financial Officer Xavier GIORGI +33 1 42 76 35 13 xavier.giorgi@paris.fr Head of Funding Yann FRANCOISE +33 1 71 28 50 62 yann.francoise@paris.fr Head of Climate-Energy and Circular Strategies 50
Disclaimer This document is not to be used or considered as an offer to sell or solicitation of an offer to buy any securities, and should not be considered as a recommendation by the City of Paris ( Mairie de Paris") that any recipient of this document should subscribe for or purchase any securities. Some information or opinions contained in this document (i) have been compiled or arrived at by the City of Paris from sources believed to be reliable, but the City of Paris does not make any representation as to their accuracy or completeness and (ii) are given at the date mentioned in the presentation and are subject to change without notice. This document is not to be relied upon as such or used in substitution for the exercise of any independent judgment and each recipient must make his or her own investigation as to the opportunity of any investment in the City of Paris. 51